SOFT Micro Co., sells part #1973 for $240 per unit and the standard cost of producing each unit of part #1973 is determined as follows:
$\begin{array}{lrr}
\text { Direct material (5 lbs. $ \times \$ 4 $ per lb.) } &\$20\
\text {
Direct labor (2hrs.@\$20 per hr.)} &40\
\text { Overhead(2hrs.@\$70 per hr.} &\underline{140}\
\text { Total } &\underline{\$200}\

\end{array}$

SOFT received a special order for 1,000 units of part #1973.The only additional cost to SOFT is a special packaging requirement that would cost $10 per unit.
(a.)If SOFT were currently able to sell all of its production of part #1973, what would be the minimum sales price that SOFT should consider for this special order?
(b.)Assume that SOFT has enough idle capacity to produce 1,000 units of part #1973 and that overhead is 20% variable.If SOFT wants to increase its operating profit by $110,000, what price per unit would SOFT charge for the special order?

Question

SOFT Micro Co., sells part #1973 for $240 per unit and the standard cost of producing each unit of part #1973 is determined as follows:
 $\begin{array}{lrr}
  \text { Direct material (5 lbs. \( \times \$ 4 $ per lb.) } &\$20\
 \text {  
Direct labor (2hrs.@\$20 per hr.)} &40\
 \text {  Overhead(2hrs.@\$70 per hr.} &\underline{140}\
 \text { Total } &\underline{\$200}\

\end{array}\)

SOFT received a special order for 1,000 units of part #1973.The only additional cost to SOFT is a special packaging requirement that would cost $10 per unit.
(a.)If SOFT were currently able to sell all of its production of part #1973, what would be the minimum sales price that SOFT should consider for this special order?
(b.)Assume that SOFT has enough idle capacity to produce 1,000 units of part #1973 and that overhead is 20% variable.If SOFT wants to increase its operating profit by $110,000, what price per unit would SOFT charge for the special order?

Quizplus · Accepted Answer

The Answer of SOFT Micro Co., sells part #1973 for $240 per unit and the standard cost of producing each unit of part #1973 is determined as follows:
 $\begin{array}{lrr}
  \text { Direct material (5 lbs. \( \times \$ 4 $ per lb.) } &\$20\
 \text {  
Direct labor (2hrs.@\$20 per hr.)} &40\
 \text {  Overhead(2hrs.@\$70 per hr.} &\underline{140}\
 \text { Total } &\underline{\$200}\

\end{array}\)

SOFT received a special order for 1,000 units of part #1973.The only additional cost to SOFT is a special packaging requirement that would cost $10 per unit.
(a.)If SOFT were currently able to sell all of its production of part #1973, what would be the minimum sales price that SOFT should consider for this special order?
(b.)Assume that SOFT has enough idle capacity to produce 1,000 units of part #1973 and that overhead is 20% variable.If SOFT wants to increase its operating profit by $110,000, what price per unit would SOFT charge for the special order?

SOFT Micro Co SOFT Received a Special Order for 1,000 Units of Part